CEE MARKETS-Leu stable as ruling party expected to propose new PM by Monday

Reuters Staff

7 Min Read

By Marton Dunai
BUDAPEST, June 22 (Reuters) - The Romanian leu held steady
on Thursday despite the political uncertainty over who will
succeed ousted Prime Minister Sorin Grindeanu.
Grindeanu fell in a no-confidence vote initiated by his own
party, which is controlled by political adversary Liviu Dragnea.
Dragnea is expected to come up with a new candidate by Monday,
when President Klaus Iohannis considers his choice.
Centrist President Klaus Iohannis has said he will only
approve a candidate who has a clean criminal record - something
that prevents Dragnea, who has a conviction for vote rigging,
from taking the top job himself.
"The leu will probably stick to this area of under 4.6 for a
while until markets see what is going on with the new
government," said one trader with a foreign bank in Bucharest.
"But I don't think there are reasons for it to appreciate.
There is instability, unpredictability and (hasty) policies."
Iohannis rejected Dragnea's candidate for prime minister in
December after his party won an election by a wide margin.
"It can only be hoped that Dragnea will choose his candidate
wisely. Otherwise President Iohannis will once again be unable
to agree and a deepening of the crisis will be inevitable.
Against this background (the leu) will remain under depreciation
pressure against the euro," analysts at Commerzbank said in a
note.
All other currencies also moved in tight ranges on Thursday.
In the Czech Republic, the crown could continue to
appreciate, albeit slower, despite a fresh message from several
rate-setters, including central bank Governor Jiri Rusnok, that
rate hikes may come later than expected.
A strengthening Czech crown may lead to a slower rise of
interest rates, possibly pushing a move beyond the third quarter
projected in the central bank's latest economic outlook, Rusnok
was quoted as saying on Wednesday.
"We view the change of guidance as the result of declining
inflation momentum around the region, and declining probability
of the ECB hiking rates anytime soon," Commerzbank said.
"But such a change of guidance is likely to slow down the
pace of CZK appreciation from here - we forecast EUR-CZK to stay
stable at around 26.00 through end-2017."
Stocks around the region fell moderately except in Budapest
where majors OTP Bank and Richter
fuelled mild gains.
French President Emmanuel Macron on Wednesday singled out
Hungary and Poland when he said EU states that spend the bloc's
finances but turn their backs on its principles should feel "the
full political consequences".
Macron will meet leaders of the Visegrad Four nations of
Poland, Hungary, Slovakia and the Czech Republic at a summit of
the European Council on Thursday and Friday.
CEE MARKETS SNAPSHO AT 0947 CET
T
CURRENCIES
Latest Previo Daily Change
us
bid close change in
2017
Czech crown 26.3000 26.286 -0.05% 2.69%
0
Hungary 309.660 309.44 -0.07% -0.27%
forint 0 00
Polish zloty 4.2555 4.2539 -0.04% 3.49%
Romanian leu 4.5930 4.5974 +0.10 -1.26%
%
Croatian 7.4150 7.4175 +0.03 1.89%
kuna %
Serbian 121.660 121.74 +0.07 1.39%
dinar 0 00 %
Note: daily calculated previou close 1800
change from s at CET
STOCKS
Latest Previo Daily Change
us
close change in
2017
Prague 992.40 994.97 -0.26% +7.68
%
Budapest 36030.9 35945. +0.24 +12.5
6 23 % 9%
Warsaw 2304.31 2319.1 -0.64% +18.3
3 0%
Bucharest 8344.29 8374.5 -0.36% +17.7
1 7%
Ljubljana 793.77 788.96 +0.61 +10.6
% 2%
Zagreb 1856.47 1856.0 +0.02 -6.94%
3 %
Belgrade 702.58 704.04 -0.21% -2.06%
Sofia 684.73 686.25 -0.22% +16.7
6%
BONDS
Yield Yield Spread Daily
(bid) change vs change
Bund in
Czech spread
Republic
2-year 0.049 0.024 +069b +4bps
ps
5-year 0.024 0.044 +040b +5bps
ps
10-year 0.949 0 +070b +2bps
ps
Poland
2-year 1.936 -0.053 +257b -4bps
ps
5-year 2.608 -0.011 +299b +0bps
ps
10-year 3.186 0.006 +294b +2bps
ps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
interb
ank
Czech Rep <PR 0.34 0.41 0.5 0
IBOR=>
Hungary <BU 0.19 0.2 0.23 0.15
BOR=>
Poland <WI 1.76 1.78 1.81 1.73
BOR=>
Note: FRA are for ask
quotes prices
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(Reporting by Reuters bureaus; Editing by Alison Williams)